We are investigating how heparan sulfate influences FGFR2b signaling in specific progenitor cell types in the epithelium. The exquisite control of growth factor function by HS is dictated by the tremendous structural heterogeneity of its sulfated modifications. It is not known how specific HS structures control growth factor-dependent progenitor expansion during organogenesis. We used bioengineered 3-O-sulfated-HS to investigate HS function. Defining the minimum saccharide sequences of HS that determine the selectivity and specificity of their function will facilitate the synthesis of HS mimetics to specifically increase progenitor expansion in vitro. The aim of expanding salivary progenitors in vivo will be useful for tissue engineering. Using autologous adult biopsy cells, which can be expanded and/or directed in vitro, is a proposed treatment to repair damaged organs. One such strategy includes in vivo transplantation of organoids or stem cells grown in spheroid culture. While organoid and sphere formation mimics some aspects of development, they do not fully recapitulate organogenesis as the complex information provided by the surrounding niche, such as mesenchyme, blood vessels and nerves are not present. This is a major problem for the generation of complex branched organs in which coordinated branching morphogenesis of multiple cell types in the fetal microenvironment drive organ development. We are using multiple factors identified from the organ-specific fetal microenvironment, to maintain and expand multiple adult epithelial salivary progenitors in salisphere culture. These factors stimulated critical developmental pathways and increased expression of progenitor markers such as Keratin5, Keratin14, FGFR2b and KIT. Stimulation of both mouse and human adult epithelial progenitors with ligands produced by the fetal salivary mesenchyme increases the number of cells expressing the progenitor markers in sphere cultures. Moreover, physical recombination of the adult salispheres in a laminin-111 extracellular matrix with salivary mesenchyme, containing endothelial and neuronal cells, induced branching morphogenesis. Markers of progenitors were maintained and developmental differentiation programs were initiated. Thus, organ development provides a template for adult organ regeneration, and delineation of secreted and physical cues from the fetal niche will be useful to develop novel regenerative therapies that instruct adult salispheres to resume a developmental program and to repair and regenerate branching organs. Epithelial-mesenchymal interactions involve fundamental communication between tissues during organogenesis and are primarily regulated by growth factors and extracellular matrix. It is unclear whether RNA-containing exosomes are mobile genetic signals regulating epithelial-mesenchymal interactions. We hypothesized that miRNA transport from mesenchyme to epithelium, via exosomes, regulates epithelial progenitor cell fate. We isolated miRNA from exosomes in SMG culture and found that the mature form of the mesenchymal miRNA, miR-133b-3p, was transported from the mesenchyme to the epithelium, which did not express the primary form of this miRNA Knockdown of miR-133b-3p with antagomirs decreased endbud morphogenesis and reduced proliferation of KIT+ progenitors. We identified potential targets, and confirmed that knockdown of miR-133b-3p increased Disco-interacting protein 2 homolog B (Dip2b), whereas a mimic reduced Dipb2b levels. DIP2b, which is involved in DNA methylation, was localized with 5-methylcytosine in the prophase nucleus of a subset of KIT+ progenitors during mitosis, suggesting it may function as an epigenetic repressive regulator of KIT+ cell expansion. Our data indicates that exosomal transport of miR-133b-3p from mesenchyme to epithelium decreases DIP2b expression to epigenetically regulate KIT+ progenitor expansion during organogenesis.